Wednesday, April 23, 2014

FYI: 9th Cir Vacates Class Cert Ruling in Multi-Jurisdictional Action

Wednesday, January 18, 2012

The U.S. Court of Appeals for the Ninth Circuit recently held that a lower court abused its discretion in certifying a class that included consumers from 44 different jurisdictions, reasoning that the laws of those jurisdictions materially differed as to the issue at hand, and therefore that common issues of law did not predominate among the class.

A car manufacturer ("Manufacturer") advertised and sold cars equipped with a Collision Mitigation Braking System ("CMBS") which was designed to prevent or mitigate automobile accidents. Several plaintiffs filed a class action complaint against Manufacturer, alleging violations of various California statutes based on the claim thatManufacturersupposedly misrepresented and concealed material information in its marketing of the CMBS.

The lower court granted the plaintiffs' motion for class certification, as to a nationwide class of consumers who purchased or leased vehicles equipped with the CMBS. Manufacturer appealed.

As you may recall, Federal Rule of Civil Procedure 23(b)(3) provides that a putative class-action plaintiff must show that "the questions of law or fact common to class members predominate over any questions affecting only individual members."

On appeal, Manufacturer argued that common issues of law did not predominate, because the California statutes relied upon by the plaintiffs should not be applied to a class consisting of members of 44 jurisdictions. It further argued that common issues of fact did not predominate, because the lower court improperly assumed that all putative class members viewed Manufacturer's allegedly misleading marketing campaigns.

The Ninth Circuit held that the lower court "abused its discretion in certifying a class under California law that contained class members who purchased or leased their car in different jurisdictions with materially different consumer protection laws."

The Ninth Circuit based its holding on the fact that California law materially differed from the laws of the other jurisdictions where putative class members reside. Specifically, the California laws at issue here lacked scienter requirements, whereas many other jurisdictions do require scienter. Further, the Court noted that foreign states have a "strong interest in the application of their laws to transactions between their citizens and corporations doing business within their state," whereas California's interest in applying its law to residents of foreign states was "attenuated."

Therefore, the Ninth Circuit held that "each class member's consumer protection claim should be governed by the consumer protection laws of the jurisdiction in which the transaction took place," and therefore vacated the lower court's class certification order.

The Court also examined whether common issues of fact predominated over questions affecting only individual members. Here, the Court again agreed with Manufacturer's contention that they did not.

The Court relied on the fact that the complained-of advertising campaigns took place only on a "small scale," which did not support a presumption that the entire putative class had relied on those campaigns. Therefore, the Ninth Circuit stated that "the relevant class must be defined in such a way as to include only members who were exposed to advertising that is alleged to be materially misleading."

Accordingly, itheld that the lower court's class certification was overbroad, and vacated the same on the grounds that common questions of fact do not predominate.

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